Academic journal article Forum on Public Policy: A Journal of the Oxford Round Table

Individual and Institutional Impediments to Ethics: Making Ethical Decisions under Risk, Threat, and Stress

Academic journal article Forum on Public Policy: A Journal of the Oxford Round Table

Individual and Institutional Impediments to Ethics: Making Ethical Decisions under Risk, Threat, and Stress

Article excerpt

Introduction

Kurzban and Houser (2005) report considerable success in accurately predicting the level of cooperation in groups. The key to this success (and the direction of the research in the area) is in analyzing the psychological characteristics of the individual members. Evolution has created a polymorphic society made up of individuals with differing characteristics, risk preferences and impediments. We detail below what we feel is the true nature of ethical decision-making and what are the most important impediments, both individual and institutional, that influence this ethical-decision making.

We use the recent advances in moral psychology, neuroethics, neuroeconomics, neuroscience, biological anthropology and behavioral economics to give us significant insights into the nature of moral decision-making. Further, we also use these sciences to show the similarities and the differences in ethical decision-making by individuals. We intend, in later papers, to incorporate these insights into a real-world training program that takes into account these differences and impediments.

Decision Making Under Risk and Uncertainty

Risk and uncertainty are often used interchangeably but there is an important difference. Risk is an objective, measurable concept while uncertainty is a subjective concept that reflects each individual's evolutionary heritage, experiences, knowledge and environment. For example, while the 'risk' or probability of dying in a commercial aircraft is far less than the 'risk' of dying in a car crash, many people feel more uncertainty and are less comfortable in an airplane than in a car.

There is much research supporting the view that when making decisions, people value losses approximately twice as much as they value gains when compared to the status quo. (Tversky and Kahneman 1992) For example, people typically reject a 50150 chance of losing money they already have unless the chance of gain is about twice as much as they might lose. In this classic explanation of 'prospect theory,' Amos Tversky and Nobel Laureate Daniel Kahneman explain humans' tendency toward risk aversion. Also, Kahneman, Knetsch and Thaler (1990) have shown that people require 'substantially' more money when selling objects they possess than what they would pay to buy those same objects.

Additionally, loss aversion explains behavior outside the laboratory (Benartzi and Thaler 1995). More recent research show similar behavior in children as young as five and even capuchin monkeys suggesting a biological explanation supported by functional Magnetic Resonance Imaging (fMRI) (Chen and Lakshminarayanan 2006).

In business and governments, individuals have different 'risk preferences.' That is, their decisions are influenced by whether they are risk takers or risk averters--a condition that may vary in different situations and can change over time. Political decisions frequently are heavily influenced by the decision makers differing intuition for "playing it safe with our constituents" or "the future is in our hands, we must act swiftly and decisively!"

Hedonic Calculus

Jeremy Bentham, the father of Utilitarianism, is the first philosopher to use what has often been called 'hedonic calculus.' (Bentham 1781 [1988]) In the famous dictum of the Utilitarians, morality is creating "the greatest happiness for the greatest number." In making moral decisions, Bentham actually advocated that one could conduct a 'hedonic calculus,' or calculation by actually adding up the happiness quotient per person times the number of people. However,

Bentham stated that we need to measure hedonism (pleasure or pain) by seven circumstances: Purity, Intensity, Propinquity, Certainty, Fecundity, Extent and Duration. On a larger scale, of course, this kind of exercise is impossible, whether or not one agrees with the philosophy of utilitarianism.

In mathematical actuality, Bentham's 'calculus' is algebra and advances in neuroscience and neuroeconomics call for a revision of this 'hedonic calculus. …

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